FBR Unveils Fixed Tax Plan for Small Shopkeepers

News Desk 

Islamabad: The Federal Board of Revenue (FBR) has proposed a new fixed tax scheme aimed at bringing more than three million small retailers into the formal tax system, with minimum annual payments starting from Rs25,000.

Under the draft special procedures issued by the FBR for small shopkeepers, retailers will be required to pay tax at the rate of one percent of their annual turnover, subject to a minimum tax liability of Rs25,000.

The proposed scheme, expected to take effect from tax year 2026, will apply to individual shopkeepers with annual sales of up to Rs200 million. The draft rules have been prepared under Section 99B of the Income Tax Ordinance, 2001.

However, traders whose annual turnover exceeded Rs200 million in any of the previous three years will not qualify for the scheme. Owners of multiple outlets, large-scale retailers, jewellers and professionals including doctors, engineers and lawyers have also been excluded from the proposed framework.

The FBR clarified that participation in the scheme will be optional. Eligible shopkeepers may either opt for the fixed tax system or continue filing returns under the existing income tax regime.

According to the draft, traders will be able to register through the FBR’s IRIS portal, mobile application or by visiting their nearest tax office. The proposed rules also allow adjustment of withholding tax already deducted against the payable amount, although any excess withholding tax will not be refundable.

The FBR has invited feedback and objections from stakeholders and the general public on the proposed rules. Suggestions can be submitted within seven days of the publication of the draft in the official gazette.

Officials said the initiative aims to simplify tax compliance for small businesses and encourage unregistered retailers to join the formal economy. Shopkeepers registered under the proposed scheme will also be exempted from routine tax audits.